Honda Motor Co. (Honda) has reported a massive operating loss of about P154.5 billion (around 400 billion yen) due to its revamped electric vehicle (EV) strategy. The operating loss would be Honda’s first dip since going public in 1957, and is seen as the second largest among Japanese automakers, according to Nikkei Asia.
The large operating cost is linked to the car brand’s EV business strategy, wherein Honda took a step back when it comes to EV development and production. The Japanese automaker previously announced that it will shift its focus to developing hybrid vehicles due to weakening global demand for EVs, coupled with changing trade conditions, including U.S. tariffs that have added pressure on the profitability of some of its gasoline and hybrid models.
Honda shared that its projection has changed compared to what it expected in 2021, when EV adoption was the trend and was considered to grow significantly. As a result, Honda said that it will introduce more hybrid vehicles as it takes a step back on its EV push, cancelling the development and market launch of several EV models, including the Honda 0 Saloon, Honda 0 SUV, and the Acura RSX EV.
The Japanese automaker added that its operating loss related to the reassessment of its EV strategy could reach up to P966 billion (around 2.5 trillion yen). Despite taking a step back on its EV business strategy, Honda remains committed to electrification in the long term.
As mentioned, it will focus more on hybrid vehicles while continuing development in software-defined vehicle technologies and future EV projects. Reports also suggest that Honda is extending the life cycle of several key models, including the Accord, Odyssey, and HR-V. Speaking of the HR-V, Honda could be preparing the launch of the next-generation HR-V by 2027.
Honda is also reorganizing its automotive operations to better align strategy and execution. The Automobile Business Strategy Division and the Sales Division will be merged and restructured into two new units, which are the Business Strategy Division and the Regional Business Division. At the same time, the functions previously handled by the Software-Defined Vehicle (SDV) Business Development Division will be absorbed into the Business Strategy Division.
Autocar’s Take
Honda has recorded a large operating loss due to its realignment when it comes to its EV business strategy. It decided to take a step back when it comes to EV development due to factors such as slow global demand for EVs, as well as other issues like U.S tariffs. This shift in business strategy resulted in a significant operating loss, which is expected since Honda decided to stop its EV development in favor of developing hybrid vehicles.
Honda has been open about this shift in business strategy, as it announced several times that it will favor hybrid vehicles more than EVs. But the Japanese automaker also clarified that it will not fully halt its EV initiative, as it remains committed to electrification in the long term.
